Horrifying. Imagine that happening here. Your $50,000 or $100,000 401K is suddenly worth just enough for a month's worth of groceries.
I really don't think anyone in Venezuela is worried about their retirement account.
Likely not, much too late for that. Just shows one how bad a paper promise can become.
Same for PM promises.
Depends. Is the promise backed by actual precious metal or is it backed by metal that does not exist? An allocated gold account is a contract, backed by metal that sits in a vault (gaining access to it may be another story).
Leveraged metal ETFs (such as USLV) and futures contracts (that exceed what is in the COMEX vault) are not backed by metal and therefore referred to as "paper promises," because you are in fact buying the promise only and not the metal. Paper promises get bought and sold without any transfer of ownership of actual metal.
My quoted comment about how bad a paper promise can become was a referral to the rapidly declining purchasing power of their paper currency.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
If youre concerned about metal ETFS then don't buy them. Sheesh.
Nobody stores vast quantities of cash anyway, so this whole loss of purchasing power thing is moot. Bottomline is other asset classes have dramatically outperformed gold. Once in a while the gods allow the precious worshippers to bask in holy glory. Yay for them.
Clearly you can't convince people who don't or won't understand the benefits of PMs (even when you spell them out). I wonder if it's denial or something less interesting.
You don't buy insurance for your home hoping it burns down so that you can profit from the tragedy.
You buy it in case it burns down so you have options to rebuild and you're not helpless and homeless.
If you don't have insurance, and your home burns down: You're screwed.
We are like children who look at print and see a serpent in the last letter but one, and a sword in the last. --Severian the Lame
@cohodk said:
If youre concerned about metal ETFS then don't buy them. Sheesh.
I have long advocated that "promises" for metal (ETFs in particular) are a valuable and easy method to play SHORT TERM moves in metal prices. One must understand they are what they are. Sheesh.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
@Weiss said:
Clearly you can't convince people who don't or won't understand the benefits of PMs (even when you spell them out). I wonder if it's denial or something less interesting.
You don't buy insurance for your home hoping it burns down so that you can profit from the tragedy.
You buy it in case it burns down so you have options to rebuild and you're not helpless and homeless.
If you don't have insurance, and your home burns down: You're screwed.
Ah, but we're all here on the PM forum, and we all understand the benefits of PMs have some gold and silver and other "insurance", for example insurance policies on our homes and rental properties, and we'd be silly to argue that we shouldn't have property and liability insurance, even though they are also.. paper promises. But we'd also be a little manic to steer every single conversation toward the advocation of property insurance, and tell anecdotes all day about the guy who didn't have insurance but lives in a flood zone (and there are millions of them, but oh, "we'll rebuild!").
But back to topic of the OP, the big bills in India.
If I'm an average Indian, I simply gather up the few such notes that I have around, if I even have any, deposit them, and that's the end of it, I won't get any more of them as payment or wages, but my life will go on as before.
Ah, but if I've got bundles of the specific notes, and they're "off the books"? Well, just how and why do I have so many?
If they recalled the 100s in the US, I'd deposit a few of them and be done with it. I have no idea how all the drug dealers, tax dodgers, gun runners, embezzelers, human traffickers, extortionists, and various other thieves and criminals would handle it.
I image that most of them would simply dump in huge amounts for a (low) percentage of face to someone who can break it down and distribute it to individuals, thereby getting away with one last discount laundering before the notes expire
If you eliminate cash, you are forcing people into a system that only benefits those who skim fees on every transaction and you also give the taxing authorities a wide open window to increase taxes at will.
Both of those scenarios are not very good for ordinary people who are only trying to work and have a life. It's great for banks and expansionist governments tho'.
Q: Are You Printing Money? Bernanke: Not Literally
@ADG said:
"The 1000 and 500 Rupee notes are no longer valid currency in India. All you can do with them is deposit them into a bank account. This is simply a war on cash. The Indian government calls it "Black money" and says that withdrawing it will help erase corruption and eliminate the black market. It is scary that with a decree and a widespread propaganda message, ..........."
Well. Denominations above $100 were withdrawn in the US decades ago. Impact on our financial system or stability. None.
I was I Mexico in 1993 when over night the Government moved the decimal point 2 places on the peso.
My 100 Peso was now 1 Nuevo Peso. Very Interesting trip.
@metalmeister said:
I was I Mexico in 1993 when over night the Government moved the decimal point 2 places on the peso.
My 100 Peso was now 1 Nuevo Peso. Very Interesting trip.
Sounds interesting, please say more about it. What happened to prices? Could you still spend the old pesos?
As I remember. Everyone was in a state of shock. Of course I was just traveling in Mexico. I remember the look on the Mexican peoples faces was disbelief. Those first few days, we spent our pesos just like normal but started seeing duel pricing. The banks were changing out the currency pretty rapidly. We high tailed back to the USA to escape the chaos. The paper 500 peso was now a 5 new peso. A Coin!
Revaluing the currency like Mexico did does not change the wealth of the individual Mexican. All it did was change the format of the currency. If everyone changes at once to the Nuevo Peso, then you just use the new system. It is inflationary though. Demonetizing currency is a much different problem.
Once the Government forces a cashless society then it can easily place a fee on transactions as a way to increase revenue. A use tax. There would be nothing you could do about it either. Another thing they can do is freeze accounts to prevent a run on accounts or a flight to PM or other currencies. This may happen in India, maybe China too. Likely not here.
@EagleEye said:
Revaluing the currency like Mexico did does not change the wealth of the individual Mexican. All it did was change the format of the currency. If everyone changes at once to the Nuevo Peso, then you just use the new system. It is inflationary though. Demonetizing currency is a much different problem.
You analysis only holds true if prices AND wages instantly change by the same multiple - something that does not occur when a currency is revalued or in the case of Mexico, devalued. It is not as simple as a stock split where you are left with the same purchasing power after the split.
Devaluing one's currency is primarily done to affect international monetary relationships such as imports and exports. Unfortunately it is done at the expense of citizens who get paid in and spend the currency.
While prices and incomes eventually adjust to the devaluation, seldom does it provide complete parity. Devaluation usually results in some increase in inflation and some decline in real income. It would be smarter to devalue slowly (China?) as to lessen the immediate impact on the currency holders. Zimbabwe is a prime example of why not to drastically change the currency value.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
@EagleEye said:
Demonetizing currency is a much different problem.
Once the Government forces a cashless society then it can easily place a fee on transactions as a way to increase revenue. A use tax. There would be nothing you could do about it either. Another thing they can do is freeze accounts to prevent a run on accounts or a flight to PM or other currencies. This may happen in India, maybe China too. Likely not here.
Are you saying a move to a cashless society is demonetization?
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Correct. Everything was revalued to the new peso. However when I went back to Mexico on another trip a few months later it seemed every thing was cheaper.
Oh btw. The article above shows in India tax compliance is 2%. So avoiding tax must be a number one past time in India. I spent some time in Greece. I thought those guys were the king of tax cheats. It's all they talk about. How they are not paying any tax. BTW a lot of immigrants coming to the USA have the same philosophy.
"The Indian government's capture and compulsory transfer into bank accounts of some 86 percent of its citizens' cash was a shock to Indians and to informed people around the world. It will be studied for lessons learned by the western nations as they pursue their own wars on cash. Likely they will take a more gradual approach, supported by mass media and senior bankers' statements to support their assaults on the cash of compliant citizens."
Pay attention to what is happening around you or be one who waits until it happens to you.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Does that wisdom and knowledge work on the theory of nothing beating compound interest if the interest is eclipsed by the principal reduction due to rising rates?
I'm gonna start a new topic even MORE long winded than Baley's.
I'll need some Baley's.....
or is that "Bailey's?"
@derryb said:
Being prepared is the result of wisdom and knowledge.
Getting to the airport 3 days before the flight leaves demonstrates neither wisdom nor knowledge.
Only true if there is a schedule and the flight is on schedule. This is why the rest of us don't wait until the day before the fire to buy homeowner's insurance.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
@derryb said:
Being prepared is the result of wisdom and knowledge.
Getting to the airport 3 days before the flight leaves demonstrates neither wisdom nor knowledge.
Only true if there is a schedule and the flight is on schedule. This is why the rest of us don't wait until the day before the fire to buy homeowner's insurance.
Why is that I can't assume there will be a flight, but you can assume there will be a fire?
If there are no flights scheduled then what the heck are you doing at the airport?
@derryb said:
Being prepared is the result of wisdom and knowledge.
Getting to the airport 3 days before the flight leaves demonstrates neither wisdom nor knowledge.
Only true if there is a schedule and the flight is on schedule. This is why the rest of us don't wait until the day before the fire to buy homeowner's insurance.
Why is that I can't assume there will be a flight, but you can assume there will be a fire?
If there are no flights scheduled then what the heck are you doing at the airport?
Scheduled flights and unpredictable events are two different things. Preparation for each is not the same. I don't have homeowner's insurance because i assume there will a fire. I have it because I know that a fire, even though remote, is a possibility. Insuring my home is not the same as packing a suitcase. Even getting to the airport does require one to be prepared for potential delays. You gonna show up at 2:55 for a 3:00 flight. Good luck wid dat.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
@jmski52 said:
I'm driving. It takes longer but I get to stop whenever I want and there are things I want to do along the way. And I never lose my luggage.
Unfortunately, more people die in car accidents than plane crashes. We have been seeing that play out right here.
India's war on cash seems to be a piece of cake compared to the total meltdown in Venezuela. Leave it to the Chavistas to make horrible situations, much worse.
@derryb said:
They all need to learn the "slow devaluation" method. Seems to be working here except for those silly tinfoil hatters who have caught on to the scam.
I think you are referring to inflation. And it's already been shown that all assets appreciate in value when compared to the currency they are priced in. PMs are not special, unless you consider that they often underperform other assets over long periods of time as being special.
I'll leave the plane on the tarmac for awhile and will let you know when boarding will begin. Until then, watch a football game.
I am referring to the decline in "real" wages (income when adjusted for inflation). While inflation may inflate assets it unfortunately does not proportionately inflate wages. This decline in purchasing power equates to devaluation of the money earned. Recent years of deflation have slowed this spread between income and expenses, but your beloved FED would have us believe that this is a bad thing.
Something tells me your landing will be far from as smooth as your takeoff. Thanks for the offer, but for that reason I'll keep my feet on the ground.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
@derryb said:
I am referring to the decline in "real" wages (income when adjusted for inflation). While inflation may inflate assets it unfortunately does not proportionately inflate wages. This decline in purchasing power equates to devaluation of the money earned. Recent years of deflation have slowed this spread between income and expenses, but your beloved FED would have us believe that this is a bad thing.
Wage stagnation. It caused by trickle-down economics. The FED would rather see incomes rise. Or do you think they root against the economy?
@derryb said:
I am referring to the decline in "real" wages (income when adjusted for inflation). While inflation may inflate assets it unfortunately does not proportionately inflate wages. This decline in purchasing power equates to devaluation of the money earned. Recent years of deflation have slowed this spread between income and expenses, but your beloved FED would have us believe that this is a bad thing.
Wage stagnation. It caused by trickle-down economics. The FED would rather see incomes rise. Or do you think they root against the economy?
And their policy has made incomes rise. . . just for the select few. What part of the economy does it appear that they are rooting for?
Comments
Your $50,000 or $100,000 401K is suddenly worth just enough for a month's worth of groceries.
So you go to sell your 1 oz Gold Buff (the one you paid $1,300 for) and you sell it for $25,000 but the tax comes to $12,500. Now THAT's horrifying.
I knew it would happen.
I really don't think anyone in Venezuela is worried about their retirement account.
Knowledge is the enemy of fear
Likely not, much too late for that. Just shows one how bad a paper promise can become.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Same for PM promises.
Knowledge is the enemy of fear
Depends. Is the promise backed by actual precious metal or is it backed by metal that does not exist? An allocated gold account is a contract, backed by metal that sits in a vault (gaining access to it may be another story).
Leveraged metal ETFs (such as USLV) and futures contracts (that exceed what is in the COMEX vault) are not backed by metal and therefore referred to as "paper promises," because you are in fact buying the promise only and not the metal. Paper promises get bought and sold without any transfer of ownership of actual metal.
My quoted comment about how bad a paper promise can become was a referral to the rapidly declining purchasing power of their paper currency.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
If youre concerned about metal ETFS then don't buy them. Sheesh.
Nobody stores vast quantities of cash anyway, so this whole loss of purchasing power thing is moot. Bottomline is other asset classes have dramatically outperformed gold. Once in a while the gods allow the precious worshippers to bask in holy glory. Yay for them.
Knowledge is the enemy of fear
Clearly you can't convince people who don't or won't understand the benefits of PMs (even when you spell them out). I wonder if it's denial or something less interesting.
You don't buy insurance for your home hoping it burns down so that you can profit from the tragedy.
You buy it in case it burns down so you have options to rebuild and you're not helpless and homeless.
If you don't have insurance, and your home burns down: You're screwed.
--Severian the Lame
And, why chastise those who choose to insure?
I have long advocated that "promises" for metal (ETFs in particular) are a valuable and easy method to play SHORT TERM moves in metal prices. One must understand they are what they are. Sheesh.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Ah, but we're all here on the PM forum, and we all understand the benefits of PMs have some gold and silver and other "insurance", for example insurance policies on our homes and rental properties, and we'd be silly to argue that we shouldn't have property and liability insurance, even though they are also.. paper promises. But we'd also be a little manic to steer every single conversation toward the advocation of property insurance, and tell anecdotes all day about the guy who didn't have insurance but lives in a flood zone (and there are millions of them, but oh, "we'll rebuild!").
But back to topic of the OP, the big bills in India.
If I'm an average Indian, I simply gather up the few such notes that I have around, if I even have any, deposit them, and that's the end of it, I won't get any more of them as payment or wages, but my life will go on as before.
Ah, but if I've got bundles of the specific notes, and they're "off the books"? Well, just how and why do I have so many?
If they recalled the 100s in the US, I'd deposit a few of them and be done with it. I have no idea how all the drug dealers, tax dodgers, gun runners, embezzelers, human traffickers, extortionists, and various other thieves and criminals would handle it.
I image that most of them would simply dump in huge amounts for a (low) percentage of face to someone who can break it down and distribute it to individuals, thereby getting away with one last discount laundering before the notes expire
Liberty: Parent of Science & Industry
Baley has much more patience to write out a response than I.
So thank you Baley.
Knowledge is the enemy of fear
If you eliminate cash, you are forcing people into a system that only benefits those who skim fees on every transaction and you also give the taxing authorities a wide open window to increase taxes at will.
Both of those scenarios are not very good for ordinary people who are only trying to work and have a life. It's great for banks and expansionist governments tho'.
I knew it would happen.
Actually a cashless economy is more efficient and reduces the costs of doing business.
Remember when the tractor was created and talk of all the jobs that would be destroyed?
Knowledge is the enemy of fear
500's and 1000's are still legal tender though.
My YouTube Channel
I was I Mexico in 1993 when over night the Government moved the decimal point 2 places on the peso.
My 100 Peso was now 1 Nuevo Peso. Very Interesting trip.
100% Positive BST transactions
Sounds interesting, please say more about it. What happened to prices? Could you still spend the old pesos?
Liberty: Parent of Science & Industry
I'm also intrigued about the peso situation.
My YouTube Channel
As I remember. Everyone was in a state of shock. Of course I was just traveling in Mexico. I remember the look on the Mexican peoples faces was disbelief. Those first few days, we spent our pesos just like normal but started seeing duel pricing. The banks were changing out the currency pretty rapidly. We high tailed back to the USA to escape the chaos. The paper 500 peso was now a 5 new peso. A Coin!
100% Positive BST transactions
Revaluing the currency like Mexico did does not change the wealth of the individual Mexican. All it did was change the format of the currency. If everyone changes at once to the Nuevo Peso, then you just use the new system. It is inflationary though. Demonetizing currency is a much different problem.
Once the Government forces a cashless society then it can easily place a fee on transactions as a way to increase revenue. A use tax. There would be nothing you could do about it either. Another thing they can do is freeze accounts to prevent a run on accounts or a flight to PM or other currencies. This may happen in India, maybe China too. Likely not here.
You analysis only holds true if prices AND wages instantly change by the same multiple - something that does not occur when a currency is revalued or in the case of Mexico, devalued. It is not as simple as a stock split where you are left with the same purchasing power after the split.
Devaluing one's currency is primarily done to affect international monetary relationships such as imports and exports. Unfortunately it is done at the expense of citizens who get paid in and spend the currency.
While prices and incomes eventually adjust to the devaluation, seldom does it provide complete parity. Devaluation usually results in some increase in inflation and some decline in real income. It would be smarter to devalue slowly (China?) as to lessen the immediate impact on the currency holders. Zimbabwe is a prime example of why not to drastically change the currency value.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Are you saying a move to a cashless society is demonetization?
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
The ECB just today devalued the euro once again with more QE.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Correct. Everything was revalued to the new peso. However when I went back to Mexico on another trip a few months later it seemed every thing was cheaper.
100% Positive BST transactions
Oh btw. The article above shows in India tax compliance is 2%. So avoiding tax must be a number one past time in India. I spent some time in Greece. I thought those guys were the king of tax cheats. It's all they talk about. How they are not paying any tax. BTW a lot of immigrants coming to the USA have the same philosophy.
100% Positive BST transactions
War on cash spreads to India
"The Indian government's capture and compulsory transfer into bank accounts of some 86 percent of its citizens' cash was a shock to Indians and to informed people around the world. It will be studied for lessons learned by the western nations as they pursue their own wars on cash. Likely they will take a more gradual approach, supported by mass media and senior bankers' statements to support their assaults on the cash of compliant citizens."
Pay attention to what is happening around you or be one who waits until it happens to you.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
This is not a "war on cash".
Hard to imagine being so scared all the time.
Knowledge is the enemy of fear
Hard to imagine being so naive all the time.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
And the most easily controlled and manipulated are the fearful unwise.
Boo!!
Knowledge is the enemy of fear
boo back at ya. A banker's perspective keeps things colorful. lol.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Damn rose colored glasses. Lol
No fear here. Wisdom and knowledge trumps fear.
Knowledge is the enemy of fear
Does that wisdom and knowledge work on the theory of nothing beating compound interest if the interest is eclipsed by the principal reduction due to rising rates?
I'm gonna start a new topic even MORE long winded than Baley's.
I'll need some Baley's.....
or is that "Bailey's?"
Being prepared is the result of wisdom and knowledge.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Getting to the airport 3 days before the flight leaves demonstrates neither wisdom nor knowledge.
Knowledge is the enemy of fear
Only true if there is a schedule and the flight is on schedule. This is why the rest of us don't wait until the day before the fire to buy homeowner's insurance.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
I'm being buried by an avalanche of metaphors.
Here's a warning parable for coin collectors...
Why is that I can't assume there will be a flight, but you can assume there will be a fire?
If there are no flights scheduled then what the heck are you doing at the airport?
Knowledge is the enemy of fear
Scheduled flights and unpredictable events are two different things. Preparation for each is not the same. I don't have homeowner's insurance because i assume there will a fire. I have it because I know that a fire, even though remote, is a possibility. Insuring my home is not the same as packing a suitcase. Even getting to the airport does require one to be prepared for potential delays. You gonna show up at 2:55 for a 3:00 flight. Good luck wid dat.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Since I'm the pilot, the plane leaves when I do.
Knowledge is the enemy of fear
good answer.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
You could be a pilot too.
Knowledge is the enemy of fear
I already have a parachute.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Who said I was gonna let you on my plane? Lol
Of course you're welcome aboard. Everyone is.
Knowledge is the enemy of fear
I'm driving. It takes longer but I get to stop whenever I want and there are things I want to do along the way. And I never lose my luggage.
I knew it would happen.
Unfortunately, more people die in car accidents than plane crashes. We have been seeing that play out right here.
Knowledge is the enemy of fear
India's war on cash seems to be a piece of cake compared to the total meltdown in Venezuela. Leave it to the Chavistas to make horrible situations, much worse.
cbc.ca/news/world/venezuela-currency-chaos-1.3901515
They all need to learn the "slow devaluation" method. Seems to be working here except for those silly tinfoil hatters who have caught on to the scam.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
I think you are referring to inflation. And it's already been shown that all assets appreciate in value when compared to the currency they are priced in. PMs are not special, unless you consider that they often underperform other assets over long periods of time as being special.
I'll leave the plane on the tarmac for awhile and will let you know when boarding will begin. Until then, watch a football game.
Knowledge is the enemy of fear
I am referring to the decline in "real" wages (income when adjusted for inflation). While inflation may inflate assets it unfortunately does not proportionately inflate wages. This decline in purchasing power equates to devaluation of the money earned. Recent years of deflation have slowed this spread between income and expenses, but your beloved FED would have us believe that this is a bad thing.
Something tells me your landing will be far from as smooth as your takeoff. Thanks for the offer, but for that reason I'll keep my feet on the ground.
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan
Wages will increase.
Ok, I'll offer your seat to another. Noah left many behind also.
Knowledge is the enemy of fear
Wage stagnation. It caused by trickle-down economics. The FED would rather see incomes rise. Or do you think they root against the economy?
And their policy has made incomes rise. . . just for the select few. What part of the economy does it appear that they are rooting for?
"How many times can a man turn his head and pretend he just doesn’t see?” - Bob Dylan